Border Tax Will Hurt Businesses in Both CountriesApril 6, 2017
written on behalf of Feigenbaum Law
In February, we discussed the US administration’s unclear stance on the Canadian-US trade relationship, and potential renegotiation of NAFTA.
NAFTA renegotiation initiated
Last week, the US Congress received a list of priorities that the administration wished to raise, beginning the process of renegotiating NAFTA. While the tone may be somewhat less antagonistic than on the campaign trail, there are still several issues that could be of concern to Canadian companies with US exports and operations.
Although still too early to tell whether the impact will be significant, the draft letter includes rules of origin amendments to prioritize US production, and potential changes to the refunding of GST for products exported across the border to the US.
Border tariff is potentially damaging, and unpopular
Speaking this week at a World Economic Forum event in New York, Canada’s Finance Minister Bill Morneau spoke of the risks to cross-border business between Canada and the United States if a proposed border tax is imposed.
Companies in Canada that export to the United States, and indeed any businesses that rely on the sale of manufacturing inputs or end products across the border, are concerned that the tax could hurt their business and their communities.
Mr. Morneau, referencing the Canadian government’s preliminary examination of the potential impacts of a border tax or tariff, warned of a greater loss to the United States in the long run. This strong opposition comes on the heels of reports from Washington last week by Natural Resources Minister, Jim Carr, that the proposition remains unpopular.
Mr. Carr has noted that there is little support in Washington for the proposed tax on Canadian imports, after speaking with congressmen, senators and energy executives, saying that it remains, “a work in progress.”
Toronto tax lawyers and accountants specializing in US-Canadian corporate tax planning
At Feigenbaum Tax Law, our cross-border lawyers and accountants are watching developments very closely to see how these changes could impact our clients, and their businesses.
If your company has any cross-border operations or exports, we provide sound legal advice about corporate tax planning, and help you make decisions in times of uncertainty.
You can contact us online, or call toll free at (877) 275-4792.